It's beginning to look a lot like Christmas 2010 could be the biggest stay-at-home festive season in years, as a cocktail of tight purse strings and expensive pubs makes a cosy fireside gathering of friends and neighbours the most attractive option for a growing number of revellers.

That has to be good news for c-stores, as chances are these party- goers will be coming your way for supplies. The enormous investment being lined up for this festive season from the manufacturers and suppliers of leading spirits brands suggests there's good money to be made from a category that really comes into its own at Christmas.

At Christmas last year, the spirits category in the off-trade grew at 6% which was significantly ahead of the total beers, wines and spirits market and represented £58m value growth (Nielsen 12 weeks to December 27, 2009). An additional 2.6 million more customers added spirits to their basket than at Christmas 2008.

In the neighbourhood retail trade, spirits account for a 21% share of alcohol sales, fighting for share with wine (34%) and beer (29%). It's also one of the most lucrative categories in terms of basket spend, with spirits shoppers averaging £15.20 per visit, well over twice the norm.

According to the Convenience Tracking Programme from HIM, 16% of customers who bought spirits did so on impulse, and a whopping 90% of spirits buyers are looking for products to drink the same day, and 40% within two hours. Further playing into the c-store's hands, the average age of spirits shoppers is 49, says HIM, while the consumers it designates as 'Retired Greys' a key age group for local shops make up 21% of spirit sales.

No wonder that Dave Smith, sales director at the largest spirit manufacturer Diageo UK, is urging C-Store readers to "transform the focus you give to spirits it's a sure-fire way to make more money this Christmas".

His advice is to completely rethink the fixture and build "fantastic" displays around the brands which are leading growth. "There's huge innovation in spirits coming this season and you will want to get behind that with displays and promotion," he says. "Identify the core brands that will work for you, work with the manufacturers and their sales teams who are committed to supporting you, and you'll have a bigger and better Christmas."

Pernod Ricard UK is also urging c-stores to prioritise the category for attention over the next few weeks. It suggests looking at providing customers with trade-up options, capitalising on the potential of effective merchandising and gift packs, and focusing on driving trial and education. In particular, it says, it's the quality end of the shelf that will deliver for you, as premium spirits are currently growing ahead of the category, particularly at Christmas.

"Premium spirits over-index at Christmas occasions in terms of what consumers serve and order," says the company's off-trade channel director for spirits Chris Ellis. "£1 in every £5 spent on premium spirits last year rose to £1 in every £4 at Christmas, so this is an ideal time to capitalise by giving them the right level of visibility and availability. This means ensuring off-shelf displays include adequate space for premium brands, providing shoppers with ideas and inspiration at fixture and positioning premium brand leaders at eye level on shelf to make the purchasing decision easier for consumers.

"Even in tight economic times, people are still willing to trade up for particular occasions (family time, gifting and party time), so it is important to capitalise on this opportunity to sell popular higher-margin brands that consumers know and trust."

top eight growers 
1Baileys coffee +573% 2Jagermeister +101% 3Grant's +77% 4Russian Standard +54% 5Isle of Jura +54% 6Disaronno +37% 7Drambuie +36% 8Glenfiddich +34% Source: Nielsen, year to July 2010, and sales change
However, Vicky Lee of Continental Wine & Food (CWF) takes a very different view, but still sees a huge win for the sector. "This Christmas period will be particularly interesting as consumer confidence continues to be at a low ebb with lack of job security," she says. "With less disposable income in the home and more consumers choosing to consume at home, they will be making their last-minute purchases at local independents."

In fact, her message couldn't be more different from Ellis'. "Christmas is traditionally a time for consumers to pay a little more and enjoy the mainstream brands, but 2010 will be different with family finances still being stretched to the limit," Lee believes. "Affordable spirit and liqueur brands can often offer a more profitable yet equally as attractive alternative."

CWF believes customers will be looking for something different and fun for the party season, and its range of liqueurs and cocktails for those who want to stray away from regular choices includes mixer favourites such as Orchards Peach Schnapps, Bali Rum & Coconut and Pastures Irish Cream as well as the established Sambuca, Limoncello and Amaretto liqueurs.

Why spirits?
Convenience Store asks David Smith of Diageo GB why he's so confident the spirits category is a convenience winner this Christmas. 

"There are plenty of reasons why you should transform your attitude to selling spirits this festive season. Spirits have been the engine room of beer, wines and spirits growth, growing four times faster than the rest of the market and up £36m last Christmas. "Our brands, including Smirnoff, Bells, Baileys and Morgan's Spiced, usually account for about 7.7% of licensed sales, but at Christmas that shoots up to 20%. 

We'll be putting £47m into marketing this Christmas. "This year, innovation in the category is flying. You'll see new pack sizes particularly 35cl and 5cl, which will drive trial; and we've added new flavour variants to the Smirnoff and Baileys ranges. 

"Cocktails are a huge opportunity, but stock pre-mixes first, then think of cocktails if you have the space. "Rum is one of the biggest things now and we believe interest will carry through the coming months, too."
On the rocks?

Vodka is still very much the category leader in spirits, but its huge rise over the past few years has flattened over the past 12 months. In grocery, it shifted fewer units in the year to July 2010 than in 2008/9, and sales value rose by a disappointing 4%.

Smirnoff Red is the one brand no spirits fixture should be without, ruling not only in the vodka category, but in spirits as a whole. Indeed, supplier Diageo says that of the 98 million bottles of all spirits sold in the 12 weeks leading up to Christmas 2009, almost nine million (one in every 11) were Smirnoff. Its 12% sales value growth maintained that market- leading position, while Pernod Ricard's Absolut took a steep 41% dive in value sales and halved its volume as it repositioned to a more premium appeal. First Drinks' Russian Standard more than filled the gap, overtaking Absolut to take third place in the category behind Glen's.

This Christmas Smirnoff's 'Be There' campaign will form the basis of a £4.6m investment in the brand while a further ad, launching this month, will stress Smirnoff's quality and suitability as the base of mixed drinks. Diageo is also adding a third variant to the Smirnoff Flavours range. Smirnoff blueberry joins lime and green apple.

Absolut, meanwhile, will be fighting back with the brand's largest-ever TV advertising spend with activity throughout October during prime-time shows on Channel 4 and ITV, chosen specifically to reach the 20- to 35-year-old target audience.

Just the tonic

Gin is back after some years in the wilderness when younger adults shunned what they saw as an older person's drink. Gin's versatility has seen it bounce back this year with a 9% increase in value sales. Gordon's in particular returned to form with a 16% increase and now accounts for a staggering 42.7% of the take-home market. Tanqueray showed there's growth at the premium end with a 50% rise in sales value.

Whisky chases

Single malt whiskies barely register in convenience stores, accounting for just 1% of annual spirits sales, although there's something to be said for trying a few gift packs this Christmas (see panel, p46). Blended whiskies, however, rival vodka for the top spot in market share, with volume sales holding steady in 2009/10 compared with the previous year. Bell's is the market leader and is pulling away from rival The Famous Grouse, but it's Grant's from First Drinks that has done most to recover from a period in the shadows with a 77% rise in value sales.

Grant's fightback has been built on the success of its After Hours club and over the next few months it will be working with TV chef Nick Nairn to demonstrate whisky's versatility as an ingredient in dishes.

Rum's the word

Rum has dazzled on the spirits aisle in the past 12 months with double-digit growth in grocery.

While Bacardi is the biggest seller, it's the golden quartet of Morgan's Spiced, Captain Morgan, Lamb's Navy and Sailor Jerry that has reinvigorated the category. Rum was worth £233m in the year to July, a very creditable 10% increase over the previous year.

Bacardi is targeting convenience with promotions and innovations and a dedicated task force visiting independent stores to help retailers remind their customers that two of the more popular cocktails, Mojito and Cuba Libre, are white rum based. It will stress the value-for-money aspect of spirits with a neck collar indicating that there are 28 serves in a 70cl bottle, and the popular 50cl bottle pricemarked at £9.99 will continue to draw consumers to the brand.

Meanwhile, Lamb's Spiced Rum will drive off-trade interest in the build up to Christmas through the seemingly roundabout route of introducing bartenders to new rum-based winter cocktails; the idea being that people who try them on a night out will want to recreate their favourites at home. Halewood International's Graham Oak says that allowing consumers to try the product first hand is something that advertising can never recreate.

"With fierce competition within the spirits category, brands need to inspire and educate the people who sell the product to ensure they appeal to consumers at the point of purchase," he says.

Important imports

There's always room for a bottle of Jack Daniel's on the shelves, and its market dominance suggests it's the only American import you'll need. It grew 13% in 2009/10, while nearest rival Jim Beam fell away -7%. Among the Irish whiskies, Jameson holds the whip hand, but Bushmills has stormed back into contention for the limited space available for the category with a near-100% increase in sales value.

Liqueur lips

Baileys is pretty much the only name in town when it comes to cream liqueurs at Christmas. Remarkably, the 1ltr Baileys Original is the single biggest selling grocery SKU in November and December, with some 3.8 million households buying into the brand. Supplier Diageo says 18 million adults claim to love the brand, yet only buy an average of one bottle every three years. This season's plan to even up those figures sees the brand gaining a new variant, Baileys Hazelnut, and a £4m advertising campaign. Smaller 35cl bottles will make their debut in the convenience channel.

Vying for space behind Baileys are several Global Brands products, including Corky's vodka liqueurs which can be served over ice or with coffee. The range includes Strawberries & Cream, White Chocolate and Cappuccino.

Size matters

This year sees a healthy spread of innovative pack sizes and pre-mixes, all intended to invite consumers into the spirits category, help them to judge consumption and find new favourites.

Pernod Ricard's Chris Ellis says smaller format bottles are becoming increasingly popular as 50cl and 35cl allow consumers to trial premium spirits, and are perfect for time-pressured purchases common in convenience stores. "35cl will be a winner this Christmas for spirits it encourages trial of more premium drinks and is a convenient size for taking to friends' or families' houses over the festive period," he says.

"The 35cl size is growing faster (11% value growth) than total spirits (8.6%), while 50cl encourages consumers to experiment and also offers a great gifting option, so ensure you have at least one of the formats in your offering."
With love from ...
Gift boxes give you a secure way to bring spirits to the front of the store. 

Consumers are likely to trade up at Christmas, particularly if they're buying to impress. Pernod Ricard says premium brands over-index at Christmas time (69% versus 57% in the remainder of year) and that consumers are willing to spend a little more on other people (43% of spirits shoppers spend £15 or more), so there's an opportunity here for those last-minute gifts. 
Diageo's figures show that Christmas 2009 was a buoyant trading period, with the gifting sector valued at £165m and enjoying sales growth of 3.6% compared with the same period in 2008. In 2009 the average spend on alcohol gifts was up 13.5% to £17.30 and for whisky this was £23.70. It's hardly surprising, then, that several top brands are competing for a space on your shelves this year. 
Pernod Ricard recommends displaying gift packs early on in the festive trading period to encourage full price purchases and drive maximum value. And don't forget boxed gift sets can be displayed empty, which gives you a great chance to push spirits to the front of the store. A dedicated gifting area, with Champagne and chocolates as well as spirits, is worth considering. 
Diageo's Reserve Brands Group is offering a single malt tasting box with four categories of whisky and a flavour map education booklet, with rrps starting from £10 to meet a variety of gifting opportunities. A Tanqueray London Dry gift box includes a three-piece cocktail shaker (rrp £16.99), while the Smirnoff Black Christmas Carton at £16.80 is a classy introduction to the limited-issue vodka. 
Martell VS cognac from Pernod Ricard has a striking gold gift box including a holographic design. It is available now at wholesale cash and carries with an rrp of £23.19. Irish whiskey Jameson has two gift variants: a silver metal presentation tin and a metallic-finish green and silver box at Jameson's normal rrp of £17.99. 
Similarly, Chivas Regal has employed the talents of Barcelona artist Alex Trochut to design a gift tin (rrp £23.19) and Jack Daniel's, part of Bacardi Brown-Forman, has launched a pack containing miniature 5cl bottles of Jack Daniel's Old No.7, Gentleman Jack and Jack Daniel's Single Barrel whiskey at an rrp of £9.99. 
Two new Baileys gift packs are available in convenience. Baileys Original 20cl and Chocolate Cups allows consumers to eat the cup after drinking the Baileys, and a pack of four flavours (hazelnut, caramel, mint and coffee) offers the chance to compare all four.
retailer’s view
"We don't have much space for spirits as I think it's best to keep them behind the counter for security reasons, so I'm quite selctive with the range I stock. Vodka's the biggest seller here, particularly Smirnoff and Glen's. Whisky is next blended, that is, I've tried a few malts and they'don't work for us and then brandy. "Fractional sizes work very well for us. In whisky, for example, I'll stock brands such as Teachers and Bell's in 70cl, 35cl, 20cl and miniatures, banded vertically. At the moment I'm promoting the Smirnoff Red 50cl, pricemarked at £8.99 it's a good price point. "For Christmas I'm relying on my wholesaler to come up with some really good promotions. I think people will entertain more at home this year, but we need to compete on price if we're going to get them to shop here rather than the supermarket up the road." Jayesh Kashakry, Connoisseur, Wallington, Surrey
ones to watch...
A nut cracker 
Baileys Hazelnut joins the brand's Flavours range this month to sit alongisde the mint, coffee and caramel variants. Last year, with the launch of Baileys with a Hint of Coffee, Flavours grew 115% and contributed to a £6m sales increase in the brand at Christmas. Supplier Diageo says Flavours have added value to the creams category with 25% of the growth coming from outside the category. tel: 020 8978 6000 

Small is beautiful 
Absolut vodka is thinking big but aiming small with a 35cl bottle, intended to add margin for retailers while providing consumers with choice in the category. Supplier Pernod Ricard says Absolut is the first premium vodka to be available in this format, which it points out is becoming more popular 28% of 35cl sales in the grocery channel are driven by the vodka category. rrp: £8.99 tel: 020 8538 4484 

Starring role
 Chivas Regal is to make its promotional TV debut with an emphasis on Christmas. Pernod Ricard UK is increasing its marketing investment in the whisky brand by 25%, including a 'Live with Chivalry' ad campaign on Sky Sports to reach the brand's core audience of 25 to 34-year-old men. A new 35cl bottle is intended to encourage trial and suit home-based Christmas celebrations. tel: 020 8538 4484 

Raising Standards 
Russian Standard, the UK's number two premium vodka, has launched a programme of advertising, sampling and off-trade support. It includes activity in cash & carry groups with pallet wraps promoting the campaign. Promotional bottles will include a Russian Standard Vodka Originals privilege card, which allow purchasers to apply to win free tickets to music gigs and film screenings. tel: 02380 312000 

Ready to grow 
Whyte & Mackay is bringing VnC Cocktails, New Zealand's leading ready-to-serve cocktails, to the UK. The pre-mixes are intended to take the effort out of making cocktails and give purchasers the confidence to offer them to guests. The company says growth in the RTD market is expected to come from pre-mixed cocktails. There are four flavours: Pacific Mai Tai, Strawberry Daiquiri, Mojito and Margarita. tel: 07736 365247